Most budgets are developed yearly, but as IT becomes increasingly important to the success of the enterprise, CIOs need to look farther into the future and incorporate plans the go beyond just budgets. They need to find ways to plan beyond one or two years and consider more than finances. Looking into the future, particularly for IT, can be interesting and make significant differences. But getting it wrong can also have big impacts. Here’s what to consider as you look into the next several years of IT.
Business change is difficult to predict under the best of circumstances and for the near future. Things get much more difficult when planning for more than just the next year. That’s why it’s critical to stay simple and not get into the weeds when looking three to five years ahead. Business conditions can get better or worse quickly, and technologies will most certainly change in ways you can’t predict. Keep your planning focused on outcomes and only include details that can easily be adjusted as conditions change. IT organizations can find themselves chasing the wrong technology with inappropriate levels of financial commitments. Commit too much to the wrong tech, and it may be impossible to recover. Conversely, assume no technological changes, and you may be left in the competitive dust.
Multi-year plans are wishes with practical though behind them. If you’re able to get a significant portion of your planning right, you’ll still be wrong in some areas. When you discover those missed targets, go back and reassess your assumptions, rewrite your plans, change any technologies involved to match your new findings, and plug your new items into your plan. Make sure you include any of the original planning group in the revisions. It’s normal for people to cling to the ideas they helped develop, so don’t simply assume that everyone will agree with and understand the new direction you’ve outlined. Bring them in frequently so everyone is aware of what’s going right and wrong, and can provide input to come to mutual decisions.
Annual budgeting is the norm for accounting purposes, but that cycle doesn’t necessarily match business changes. Set up regular planning sessions to review and revise plans. Review business priorities and changes, then make decisions to continue with the current plans or revise or even start over with a significant revision. IT, in particular, needs to consider changes to business needs and new technologies that don’t follow annual budgeting schedules. New tech opportunities come along on the manufacturers’ schedules, and prime opportunities can easily be missed. Companies that flex with changes can get onboard with new openings and gain significant advantages over their competitors.
Budgets are all about finances, and planning needs to incorporate components of finance. But when planning for multiple years, the specifics of budget increases and reductions become less detailed. Multi-year plans must look at outcomes and progress. Those findings inform budgeting requests and serve as justifications for changes year to year. This allows IT and the company overall to be more nimble in their decision making and devote resources where they are required. CIOs who base budget requests based on assumptions of the success of multi-year programs can find themselves under the gun when plans don’t meet expectations. On the other hand, it’s generally easier to justify budget increases for run-away successes while recommending a reduction in spending on those initiatives that are less successful.
IT plans are, by nature, meant to benefit the organization or at least some segments of the company. Business segments that reap the benefits of a project must participate in the planning as well as the drive to achieve the desired outcomes. The CIO may be driving the technology, but it’s the business unit that will ultimately judge its success or failure. CIOs need to get strong agreement and commitments from the top levels of the business units and work with them to develop their plans. Even more critical is that executive management understands the joint obligations and responsibilities for shepherding the project through its various phases. IT projects that don’t start with strong affiliations with their beneficiaries are abandoned if new, more promising, projects are proposed when difficulties appear. Even worse, uncommitted business leaders can point blame away from themselves and toward IT if they don’t share accountability for the project’s success.
Multi-year projects offer big rewards chased by significant risks. CIO’s need to put their efforts into developing long term plans that focus on the most important aspects with the right support from within their enterprises.
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